Voluntary Redundancy Payment Calculator
Many employees choose to take voluntary redundancy as a way to leave a role they no longer want, often in exchange for a financial package. The amount they receive depends on factors such as length of service, age, salary and the terms agreed with the employer. This page explains how redundancy payments are normally calculated and provides a simple calculator to estimate your entitlement.
How Redundancy Payments Are Calculated
In most jurisdictions, statutory redundancy pay is based on three variables:
- Age Employees receive a higher multiplier for each year worked after a certain age.
- Length of Service The number of full years the employee has been continuously employed.
- Weekly Pay A capped amount of the employees weekly wage is used in the calculation.
Typical statutory formulas look like this:
- 0.5 weeks pay for each year of service under age 22
- 1 weeks pay for each year of service between 22 and 40
- 1.5 weeks pay for each year of service over age 40
Employers may offer a more generous enhanced package. This calculator lets you choose whether you want to see the statutory figure only, or add a custom multiplier for an enhanced payment.
Use the Calculator
Understanding the Result
The calculator will display two figures:
- Statutory Redundancy Pay The amount you would receive under the law.
- Enhanced Redundancy Pay If you chose an enhanced multiplier, this shows the higher payment.
Remember that tax may be payable on any amount you receive above your annual personal allowance. The figure shown is the gross amount before tax.
Things to Keep in Mind
- Notice Period Some contracts require you to work a notice period, which may affect your final weeks pay.
- Accrued Benefits Holiday pay, bonuses and other accrued benefits are usually paid separately.
- Agreement Terms If you sign a voluntary redundancy agreement, ensure you understand any noncompete clauses or repayment obligations.
- Legal Advice When large sums are involved, consulting an employment lawyer can help protect your rights.
Frequently Asked Questions
Can I claim redundancy if I resign?
No. Voluntary redundancy is a mutual agreement. If you simply resign, you are not entitled to redundancy pay.
What if my employer offers less than the statutory amount?
Employers must meet at least the statutory minimum. If they propose less, you can refuse the offer and negotiate or raise a formal grievance.
Do parttime employees receive the same calculation?
The formula uses your weekly pay, so a parttime workers lower weekly wage is automatically reflected in the result.
Is there a maximum limit to redundancy pay?
Statutory payments are capped by the weekly pay limit (currently 571 in the UK) and by the maximum number of years used in the calculation (normally 20 years).
Useful Resources
